UN calls for reform of the global finance system

By Tatenda Chitagu

NAIROBI, KENYA-The United Nations  has called for the reform of the global financial ecosystem so that multilateral lending institutions support climate action.

Speaking at the high level opening of the African Climate Summit at the Kenyatta International Conference Center today, UN secretary general Antonio Guterres said the global financial system should come up with friendly lending terms and debt suppression mechanisms for African countries, most of which are in debt distress.

“The global financial system must be an ally of developing countries as they turbocharge a just and equitable green transition that leaves no one behind. More broadly, we need a course correction in the global financial system so that it supports accelerated climate action in the context of sustainable development. We can’t achieve one without the other,” Guterres said. 

He added: “This means ensuring an effective debt-relief mechanism that supports payment suspensions, longer lending terms, and lower rates. And it means re-capitalizing and changing the business model of Multilateral Development Banks so they can massively leverage private finance at affordable rates to help developing countries build truly sustainable economies.”

He called on developed countries to avail climate financing.

“Developed countries must present a clear and credible roadmap to double adaptation finance by 2025 as a first step towards devoting at least half of all climate finance to adaptation. They must also keep their promise to provide $100 billion a year to developing countries for climate support, and fully replenish the Green Climate Fund. Countries must also operationalize the loss and damage fund proposed at COP28 this year,” Guteres said.

The UN secretary general’s remarks came as Kenyan President William Ruto said many African countries are in debt distress because of climate change induced disasters.

“A fair and international financial superstructure is not too much a proposition from Africa. Many African countries are in debt distress because of climate change,” Ruto said.

Guterres however said Africa must also play its part by making sure that its vast critical minerals benefits the majority.

“To truly benefit all Africans, the production and trade of these critical minerals must be sustainable, transparent and just across every link of the supply chain, with maximum added value produced in African countries,” he said.

According to a report of the High Level Panel on Illicit Financial Flows from Africa, the continent is estimated to lose US$50 billion annually from financial leakages, with the bulk from smuggling of strategic minerals. 

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